Africa’s ambition to build a unified financial market is facing growing resistance from within its own financial industry, as slow regional integration, fragmented payment infrastructure, and limited cross-border connectivity push institutions to prioritise domestic markets over continental expansion.
Only 7 percent of financial institutions operating across Africa report tangible progress under the African Continental Free Trade Area (AfCFTA), while 69 percent say implementation is moving too slowly, according to the sixth African Financial Industry Barometer presented in Luanda, Angola, on Tuesday.
The findings expose the widening gap between Africa’s push to deepen intra-African trade and the ability of financial institutions to move capital, facilitate payments, and expand operations seamlessly across national borders.
The challenges extend to the continent’s payment and capital market infrastructure, with 45 percent of surveyed institutions reporting no plans to connect to the Pan-African Payment and Settlement System (PAPSS), while only 11 percent are already connected.
PAPSS was established to facilitate cross-border transactions in local currencies, reduce reliance on third-party currencies and lower the cost of payments across African markets.
However, 57 percent of institutions said progress on the initiative was too slow, while 24 percent considered it to be at a standstill. Only 19 percent reported tangible progress.
The African Exchanges Linkage Project (AELP), designed to connect African stock exchanges and facilitate cross-border securities trading, faces similar difficulties. While 53 percent of respondents said progress was too slow, 43 percent described the initiative as being at a standstill. Only 4 percent reported tangible progress.
“The limited progress is already affecting institutions’ perception of the benefits of regional integration. About 41 percent said they had yet to experience tangible benefits from AfCFTA and PAPSS, while 56 percent reported no concrete benefits from the AELP.”
“The slow pace of integration is also reshaping financial institutions’ expansion strategies, with nearly half of respondents opting to strengthen their existing markets rather than pursue wider continental opportunities,”the report disclosed.
About 49 percent of institutions favour consolidating their current markets, making it the most preferred growth strategy. Regional partnerships and alliances ranked second at 42 percent, followed by organic expansion at 37 percent and mergers and acquisitions at 32 percent.
Banks and insurance companies are particularly cautious, with 50 percent and 55 percent respectively favouring consolidation in their existing markets.
Fintech companies are more inclined towards organic expansion, with 75 percent identifying it as their preferred strategy, while 67 percent of Pan-African financial groups favour consolidating their existing operations.
The caution is more pronounced among local institutions, with 33 percent reporting no regional expansion plans.
This comes despite relatively strong confidence across the industry. The overall confidence score among African financial institutions remained at 8 out of 10, unchanged from 2025.
The report added that institutions operating across multiple markets recorded a higher confidence score of 8.53, while regional groups improved to 8.00 from 7.25 in the previous year.
“Capital markets recorded the strongest confidence score at 8.57, compared with 6.50 in 2025, while fintechs maintained 8.25 and banks improved to 8.00 from 7.80,” it said.
Beyond integration, cybersecurity, geopolitical uncertainty and talent shortages are emerging as major concerns for the financial industry.
About 66 percent of institutions reported an increase in digital fraud, rising to 88 percent among banks and fintechs. Cybersecurity was identified as a major concern by 51 percent of respondents, while 48 percent cited geopolitical risks and 41 percent pointed to talent shortages.
The slow pace of financial integration is particularly significant given the scale of capital available within the continent.
Data from the report pointed that African pension funds and insurance companies hold an estimated $775 billion in assets, yet a significant proportion of these resources remain difficult to channel into productive investments across sectors and markets.
While 64 percent of surveyed institutions reported significant engagement in financing small and medium-sized enterprises, 41 percent said they were not involved in affordable housing financing.
“Unlocking these resources will require more open markets, easier cross-border capital flows, investment guarantees and blended finance structures capable of reducing risks for investors,” the report said.
Chinwe Michael is a Nigerian business journalist and media professional with over 4 years of experience covering companies, financial markets, banking, fintech, economic policy, financial inclusion, and corporate affairs. She currently leads the Companies & Markets desk at BusinessDay, where she drives coverage of Nigeria’s corporate and capital markets, translates complex financial data into accessible stories, and mentors younger journalists. Prior to that, she was the head of the financial inclusion/fintech desk. With a background in banking and finance and extensive experience in media and communications, Michael has developed expertise in financial journalism, economic analysis, investigative reporting and market intelligence. Her work examines how monetary policy, corporate performance, capital flows, technology, and regulatory decisions affect businesses, investors, and households. She was selected from about 3,000 applicants as one of 20 journalists for Cohort 4 of the MTN Media Innovation Programme, gaining exposure to new approaches to journalism, technology, and media innovation. Her international journalism experience and engagement with professionals across Russia, Dubai, Saudi Arabia, and others in different sectors have further broadened her understanding of global communication and development.
